While tensions seem to be easing over Iran after their temper tantrum in the Straits of Hormuz, the oil market now is focused on growing tensions in the North Sea. These tensions do not involve a conflict between countries but a conflict between Norway's Statoil and Norway's oil labor union the oil industry association. While the strike has been going on for only 12 days, already it seems Statoil has had enough and said it would lockout all workers at midnight on Monday. That would essentially shut down all of Norway's oil production removing close to 1.2 million barrels of oil from the world supply. News of the lockout sent oil soaring just after it was starting to calm after Iran's bluster and blow. The move takes oil higher again after short traders exited at the end of the last quarter afraid that this holiday week would provide more than just fireworks.

The Iran threat seemed to fizzle as more talks surrounding their nuclear program will commence. Boasts that missiles could attack US bases and Israel minutes after an attack, were met with a show of force by the US military. The market laughed off the Iranian puppet parliaments vote to shut the Straits of Hormuz as the US military basically said, go ahead, make my day.

Instead the EU said that they would hold more talks with Iran over its nuclear program. Iran of course is claiming that the embargo will have no impact on their nuclear ambitions. Of course it will be interesting to see how they plan to fund it as the ships full of oil continue to get backed up. Iran's President Mahmoud Ahmadinejad has said that Iran does not seek revenge on Europeans over European Union embargo on the Islamic republic which is a change of heart from his earlier threatening rhetoric. It seems delusion in not in short supply in Iran.

Of Course US oil may be in shorter supply due to a slowdown in imports because of tropical storm Debby. The American Petroleum Institute report said exactly that. The API stats showed that crude oil supply fell by 3.03 million barrels, gasoline down by 1.4 million barrels and distillate supply lower by 1.15 million barrels.

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Phil Flynn